Ukraine Crisis: Kiev Faces Halt To Gas Supply

Gazprom has reaffirmed its Monday deadline for Ukraine to pay its debts after talks between Moscow and Kiev ended without agreement.The Russian gas giant said it will cut Ukraine’s supply if Kiev fails to pay $1.95bn (£1.15bn) by 06:00 GMT.

“We reached no agreement. The chances that we meet again are slim,” Gazprom spokesman Sergei Kuprianov said.

But EU Energy Commissioner Guenther Oettinger, who attended the talks, said he was “not pessimistic” about a deal.

He said he would continue to work for an agreement despite his compromise proposal, that Kiev pay $1bn on Monday and the rest in instalments, being rejected by Gazprom.

Ukraine’s discounted rate for gas was axed in April after Moscow accused Kiev of failing to pays its bills.

Mr Kuprianov said Russia would switch to a pre-payment system if it did not receive the money, meaning Moscow could cut off gas supplies to Ukraine.

Correspondents say the European Union could be affected if Gazprom cuts its supply to Ukraine.

Earlier this month, Gazprom gave Ukraine more time to settle its gas bill after receiving a part-payment of $786m (£469m).

Ukraine said it refused to clear its debts completely in protest at Gazprom’s recent 80% price increase.

Gazprom ended its discount price for Ukraine, which was negotiated by former President Viktor Yanukovych last December, in April.

Before the discount was cancelled, Ukraine’s gas bill was heavily reduced by Russia to $268 per 1,000 cubic metres.

The price is now $485.50 per 1,000 cubic metres, the highest in Europe.

Almost 15% of gas used in Europe comes from Russia via Ukraine, which is why EU members are taking a particularly close interest in the stand-off, observers say.

The talks that ended on Monday had been brokered by EU representatives.

Heading into the negotiations, Kiev said it was ready to make the $1.95bn payment if Russia cut its price to $326 per 1,000 cubic metres.

But Russian President Vladimir Putin said $385 per 1,000 cubic metres was his final offer.

Prospects of a breakthrough in discussions were diminished in recent days after increasing tension between Kiev and Moscow over the pro-Russian insurgency in the east of Ukraine.

Moscow reacted angrily to a violent protest outside its embassy in Kiev on Saturday after separatists shot down a Ukrainian military plane, killing all 49 people on board.

Meanwhile, Ukraine accused Russia of sending tanks into the east of the country to support pro-Russian fighters.